1/6/25: Strong start, but a little fade by the end of the day.
Naz led the markets, and Russell reversed to lose its big morning gains. RSP did the same. Looks like the big boys are the leaders again.
Naz closed nicely above the 21dma and S&P closed right on it. We need to see the lows of the day stay above the 21dma.
Artificial intelligence chip stocks also rose bullishly after Foxconn, announced record fourth-quarter revenues on continued strong demand for AI servers over the weekend.
1/7/25: there was a little bump from NVDA yesterday morning. But stocks skidded after 10 a.m. ET, as stronger-than-expected job openings and ISM services index pushed up Treasury yields.
Naz down 1.9% on much higher volume. That gave the Naz distribution day #8 and recommended exposure was downgraded to 40-60%.
A clustering of distribution days on the Nasdaq — with four notable percentage declines in higher volume since Dec. 27 — is a yellow flag for growth investors
Ten year Treasury yields are an issue. 4.5% have been trouble recently and now we are at nearly 4.7%
Wed we get ADP employment and Fed meeting notes.
I think market is closed Thursday in honor of Jimmy Carter.
1/8/25 Markets had upside reversals.
The Nasdaq composite fell 0.1% but had been down nearly 1% at midday. Interestingly, the index made its low at the 50-day moving average. That offers hope the Nasdaq can continue to bounce and perhaps lead the rest of the market higher.
The S&P 500 climbed 0.2% after erasing a loss of 0.6%. The index remained below its 50-day moving average.
Volume fell Wednesday after the Nasdaq recorded the highest trading ever recorded on Tuesday. But that record came at the hands of several low-priced stocks that traded millions of shares beyond normal.
the MarketSurge short-term overbought-oversold oscillator is near the zero mark, meaning there’s no tendency for either bulls or bears to take control.
The S&P 500 tends to climb for the year when the benchmark index is up in the first five sessions of January. Whichever direction the index goes the first five days, the S&P 500 goes in that direction for the full year 68% of the time.
Full-year returns average 16% when the indicator is positive, but only 2.6% when the indicator is negative. Wednesday marked the first five days of 2025 and the S&P rose a collective 0.6% in that time.
The 10-year Treasury yield came off session highs and was flat from Tuesday afternoon at 4.69%
The trading environment is extremely dangerous. Investors will get bullish signals in a sideways market that lures them in. But most of those names will fade within a couple days, sometimes within minutes. Investors can still have significant exposure, but probably raising cash in recent days is a good idea, if only by selling specific holdings.
1/10/25 - Market is not dead, but in the ICU
The patient’s blood pressure is dangerously low, S&P and Naz below 50dma. Small caps took a body blow, losing 2.2%. Toxicity measures were high, with the yield on the 10-year reaching 4.7%
The patient would look broken if the major indexes go decisively below Friday’s lows, signaling the start of a true correction.
It might be wise to raise some cash for the funeral, or a good party if the patient survives.
The first pulse to take in an emergency is your own.
To quote an okay investor, the Oracle Warren Buffet, it is wise for investors “to be fearful when others are greedy and to be greedy only when others are fearful.”
We’re not yet fully 5% down from a high. Could we go lower, sure. Are we in a Cyclical Bear? Not yet, and not necessarily will be. Could we? Sure. Weight the risks.
There are multiple issues at play. SPY has a head-and-shoulder pattern that suggests a drop to 5640. Several resistance levels and somewhat clustering fibonacci as well as the rising 200 sma supports a zone of drop (the red oval) roughly 5625 to 5725. Not quite 10% drop.
The world is still turning on it’s axis. It might fall off, but nothing at this time suggests that will happen. Yep, I’ve taken profits and trimmed. But my watchlist is ready and so are about a dozen orders saved. A little adjustments and they can fire at a moments notice.
Happy hunting,
Lakedog
Market Health needs to also keep in mind upcoming events that could have major influence.
Tuesday: December Core PPI (expected +0.3%)
Wednesday: December Core CPI (expected +0.2%)
Friday is OPEX. Note, the indices are not that far off, but major players like NVDA, TSLA, META are over 30% negative in net call to put.
Lakedog
…still a bull, but markedly reduced risk on the table
True, sometimes the editor is feeling lazy. I will talk to him about that.
The editor is everyone. You have a lot of talking to do. The comment was not directed.
No, I did not take it that way. Should have used an emoji.
1/13/25 - light at the end of the tunnel?
Markets opened down again, but this time had nice upside reversals to finish (mostly) positive. Closing at or near the session low of Naz 18,831 would have indicated that sellers took the upper hand all day. Is this a sign the tax-gain selling is over? Ten year yields up again but that did not hurt today’s market. Hmmm. The market definitely has a lot of repair work to do.
Volume was lower than yesterday.
The Labor Department’s producer price index for December is due out Tuesday at 8:30 a.m.
It is the start of earnings season and bans will be reporting this year.
There were a couple M&A deals today, watch for that to pick up and watch for more IPOs as a sign of animal spirits reawakening and driving the next leg up.
Ten Year Yield
1/14/25 - mixed markets, but Naz had a downside reversal. MDY, IWM, RSP, QQEW outperformed. Is tax gain selling profits rotating away from Mega Cap, or is this a 1-2 day thing. Ten year rates up yesterday and down today, but IWM and MDY up both days in contrast to recent correlation. Hmmm
Stocks making new highs have been few while those making new lows have been hitting triple digits over the past four trading sessions on both the Nasdaq and the NYSE.
On Wednesday, the consumer price index is due before the opening bell. (CPI)
The laggards of 2024 are rotating into market leadership. Energy, health care and materials are taking positions as top January winners.
The stock market rally is hanging by a thread. While a recovery is still possible, the Nasdaq and S&P 500 face multiple resistance levels to the upside and little support below. if you’re betting on an individual stock, you’re betting that the market will quickly improve. As an investor, you should be paying attention to what the market is doing, not what you think it will do or hope it will do.
Can I ask where this quote is from? Sources help interpretation.
BTW, yesterday was also an “S7-Trending below 21-day”
Lakedog
The hanging by a thread comment was from one of the end-of-the-day articles on IBD. This is evidenced by their recommended exposure of 20-40%, which could go up tonight.
1/15/25 - market perks up
Futures got hot when the CPI numbers came in cool. Earnings beats by some banks boosted animal spirits. Ten Year yield had a big drop, which generally helps the markets and really helps the small caps.
The Nasdaq composite led with a burst of nearly 2.5% that took the index back above its 50-day moving average. The S&P 500 added 1.8% and closed just below its 50-day line. For both, it was their best day since Nov. 6. Russell 2000 up 2%, but still below 50dma. MDY bumped up to 50dma and then fell from there. MDY bounced up against its 50dma, but then reversed down a bit.
Recommended Exposure bumped up to 40-60%
If the Nasdaq extends gains and the S&P 500 retakes its 50-day line, that would be a positive sign. The Dow Jones, Russell 2000, RSP and QQEW also aren’t that far away from their 50-day averages. But if the Nasdaq can’t hold the 50-day line and starts heading toward lows, that would be a big negative.
As usual we recall Webby’s preferred measure, the lows of a stock or index should be living above the moving average. After the indexes retake the 50s, look for that, then look for 21dma to move above 50dma and also for higher highs and lower lows.
Breadth was unusually bullish, with advancers over decliners by 11-to-2 on the New York Stock Exchange and by more than 3-to-1 on the Nasdaq
IBD:
Jeff Schulze, head of economic and market strategy at ClearBridge Investments, said in written comments that core CPI broke a four-month streak of 0.3% monthly gains. “Today’s inflation print should be tailwind to risk assets by removing one of the bricks in the wall of worry the market is facing.”
There were a number of strong breakouts today as well.
Intuitive Surgical (ISRG), Goldman Sachs (GS), JPMorgan Chase (JPM) and Wells Fargo (WFC) triggered earnings-related buy signals. Spotify (SPOT), SAP (SAP), American Express (AXP), Pegasystems (PEGA), Semtech (SMTC) and Vertex Inc. (VERX) were among other actionable stocks.
1/16/25
Naz fell 0.9% to go below 21dma and come to rest on 50dma, but it was on lighter volume than yesterday. S&P fell 0.2% on lighter volume after failing to go over 50dma yesterday. The equal weight indexes/ETFs had a much better day, QQEW was up 0.3%, indicating there was more selling in the Nasdaq big caps. And the Invesco S&P 500 Equal Weight ETF rallied 0.8%.
With lighter volume, there were no distribution days added and the Naz and S&P each dropped one due to time (25 trading days).
IBD:
Wednesday’s rally caused IBD to raise its recommended exposure level to 40%-60% from 20%-40%. But with the S&P 500 facing resistance at its 50-day line, it’s important to hold off on aggressively raising exposure.
We need to see Naz and S&P break their pattern of lower highs and lower lows before we get to optimistic.
Ten year yields fell today, possibly on the reassuring testimony of Scott Bessent.
Technical analysts Katie Stockton was on CNBC today and said something like…
we can have a weeks-to-months period of sideways action where we consolidate gains from last year. A retest of lows often provides the best buying opportunities.
